Brand based business models Flashcards
What is a brand based business model?
Brand based business models primarily refers to business models where the brand is central and the starting point is either an existing brand or an existing product. → In markets where there are many competitors and the company has to differentiate itself.
Product line extension
(aka product extension, or line extension)
Same brand, same product category
The same established brand is used for a product in the same type of product category New design, ingredient, shape, packaging, scent, etc..
franchising
Same brand, same product category
- The owner of a brand concept allows a second party to use the entire concept
- Through licensing/collaboration agreement
- The brand concept is licensed, but also distribution channels are extended,
- Essentially all brand elements are licensed out to capture the concept
- IPRs, primarily trademarks, copyright and design rights.
- But also other unprotected elements (format)
- Both entitles and obligates the franchisee to apply the whole concept
brand extension
Same brand, new product category
- The same established brand is used for a product in a new type of product category.
- To promote and enforce the original brand but also the new product.
- Offer a full brand experience
merchandising
(aka logo-slapping)
Same brand, new product category
- A form of brand extension, but more focused on creating products around the brand to promote the brand and its identity, rather than using the brand to enforce other products.
- For example compare Iron Maiden t-shirt to Iron Maiden beer…
Co-branding
Same brand, new product category (but perhaps same product category for one of the brands)
- Branding collaboration where both brands benefit.
- Most likely using brand licensing, where both parties license each other’s brands. Or joint venture where the venture licenses both brands.
- Also, ingredient co-branding where the product of one brand becomes an ”ingredient” in the product ofanother brand.
ingredient brands
ingredient-branding is creating a brand for an ingredient or component of a product, to project the high quality or performance of the ingredient.
See brand licensing and co-branding
brand licensing
Same brand, new product category
Examples are Gore-Tex, Fairtrade, The Olympic Rings
- The brand owner licenses the brand to one or several users
- Also a model in relation to production, to achieve ex brand extension
brand diversification / multibrands
New brand, same product category
- Using different brands for the same product category.
- Often different target groups and markets. Also varying quality and price.
Examples are Nestle, Coca Cola, Unilever
What brand based business models are there?
- Product line extension
- Franchising
- Brand extension
- merchandising
- Co-branding
- – ingredient brands
- Brand licensing
- Brand diversification / multibrands
What are the pros with having the same brand in the same product category?
- Easier to launch new product
- Brand and product infrastructure in place
- Leveraging, enforcing and improving the brand
- Efficient in promotion
- Developing the brand and offering consumers variety
- Attracting new consumers to the brand
What are the cons with having the same brand in the same product category?
- Can confuse the consumer
- Poses a risk to the brand if it fails
- Can cannibalize the head brand
- Can dilute the brand identity
What are the cons with having the same brand in a new product category?
- Can even more confuse the consumer
- Poses an even greater risk to the brand if it fails
- Can cannibalize the head brand
- Can dilute the brand identity
What are the pros with having the same brand in a new product category?
- Leveraging, enforcing and improving the brand
- Easier to launch new product
- Brand and product infrastructure in place
- Efficient in promotion
- Developing the brand and offering consumers variety
- Attracting new consumers to the brand
- Increasing the market
What are the cons with having a new brand in the same product category?
- No leveraging of one brand
- Confusing to the informed customer
- Loosing out on the benefits of building one large, strong brand identity
